PHOENIX & CHICAGO--(BUSINESS WIRE)--Harvest
Health & Recreation, Inc. (CSE:
HARV, OTCQX:
HRVSF) (“Harvest”), a vertically integrated cannabis company with
one of the largest footprints in the U.S., is pleased to announce that
it has entered into a binding agreement to acquire Verano
Holdings, LLC (“Verano”), an arm’s length third party, one of the
largest privately held multi-state, vertically integrated licensed
operators of cannabis facilities, in an all-stock transaction for an
estimated purchase price of approximately USD $850,000,000 based on a
share price of CND $8.79. The combined company will be one of the
largest multi-state operators (“MSO”) in the U.S., as measured by
licenses held and facilities permitted. Upon completion of the
transaction and regulatory approval, Harvest will hold licenses that
will allow it to operate up to 200 facilities in 16 states and
territories across the country, including 123 retail dispensaries.

Harvest’s planned acquisition of Verano will include:

Licenses and operations in 11 states and territories, including seven
cultivation licenses, 37 retail licenses and potential to reach 150+
million Americans;

Vertically integrated, cash-flow positive operations;

Proven executive team with retail, manufacturing, branding, logistics
and operational experience and 300 employees. Hiring for approximately
300 new positions in 2019 with a focus on hiring minorities, women and
veterans;

Ownership of an interest in nine Zen Leaf™ dispensaries with average
annual revenues 2.5x higher than retail cannabis industry averages;

Following completion of the transaction, the combined company is
expected to be operating 30 dispensaries, eight cultivation facilities
and seven manufacturing facilities, with expected further aggressive
operational expansion. By the end of 2019, Harvest expects to have over
70 dispensaries, 13 cultivation facilities and 13 manufacturing
facilities in operation. The company expects continued growth in 2020.

“The combination with Verano fits perfectly with our vision of creating
the world’s most valuable cannabis company,” said Jason Vedadi,
Executive Chairman of Harvest. “We are confident that this is an
opportunity to continue to leverage each of our company’s strengths and
drive continued shareholder value, while at the same time achieving the
scale we know will give us a leadership position in one of the largest
cannabis markets in the world.”

“This is a natural match between like-minded entrepreneurs who have
built our companies from the initial facilities into two of the largest
MSOs in the U.S., with an unwavering focus on operational excellence,
superior quality products and service, and delivering value to customers
and shareholders,” said George Archos, Verano Co-founder and CEO. “Our
growth and unique positioning in key markets allowed us to evaluate some
of the largest players in the space, but we only had one unanimous
choice for a major transaction and that was Harvest.”

“Verano has been creating a brighter way for cannabis production,
products and health and wellness by assembling a stellar team of experts
drawn from the cannabis industry and the top echelons of Fortune 500
corporations,” noted Sam Dorf, Verano Co-founder and Chief Growth
Officer. “We are excited to join forces with Harvest to leverage each of
our strengths to share the benefits of cannabis in innovative new ways
with an ever increasing customer base. Verano and Harvest independently
have always focused on business fundamentals to drive year over year
growth in both revenue and EBITDA. Together, we expect to accelerate
that momentum and raise the bar even higher for the industry.”

The newly combined company plans to continue hubs of operation in both
Arizona and Illinois and merge key leadership talent to create a team of
the most professional operators in cannabis. Both companies have
recently attracted management expertise across consumer-packaged-goods,
beverage, spirits, logistics, branding, horticulture, and extraction
technologies from some of the largest most influential companies in the
world, all supporting the companies’ explosive growth. Similarly, the
combined company expects to grow new and existing brands throughout its
expanded territory.

“From day one, we have operated as a fundamentally sound business
focused on consistent revenue and profit growth. We are excited to bring
Verano’s premium brands and operations into Harvest,” said Steve White,
CEO of Harvest. “We have the unique opportunity to create truly national
brands by deploying these products within the future combined footprint
of states and dispensaries. Most importantly, we share the same mission
as one new company to improve people’s lives through the goodness of
cannabis.”

Pursuant to the binding agreement entered into between Harvest and
Verano on March 10, 2019, the parties agreed to enter into a definitive
agreement within the next 30 days (the “Definitive Agreement”).

Upon closing, Verano shareholders will receive, in the aggregate, a
combination of Harvest subordinate voting shares and Harvest multiple
voting shares as mutually agreed between the parties, acting reasonably,
for a total estimated purchase price of USD $850,000,000 based on a CSE
share price of CND $8.79. It is anticipated that the acquisition will
close in the first half of 2019.

Closing is subject to the negotiation and execution of a Definitive
Agreement, applicable shareholder or unitholder approval, approval of
the Canadian Securities Exchange, as well as any other approvals that
are customary for a transaction of this nature. There can be no
assurances that the transaction will be completed as proposed or at all.
Harvest and Verano have agreed to a mutual termination fee in the amount
of US $20 million in the event either party fails to enter into the
Definitive Agreement within 30 days from the date of this agreement
(other than as a result of an uncured breach by the other party). The
transaction was negotiated entirely at arms-length. Verano has
approximately US$3.2 million in long term debt which will remain in
place following completion of the transaction. Further, completion of
the transaction will not result in a change of control of Harvest.

Eight Capital is acting as Harvest’s financial advisor in connection
with the transaction and INFOR Financial Inc. is acting as financial
advisor to the special committee of Harvest’s board of directors. In
addition, Eight Capital and INFOR Financial Inc. have each provided an
opinion to the board of directors of Harvest that, as of the date of the
opinion and subject to the assumptions, limitations and qualifications
on which the opinions were based, the consideration being paid by
Harvest in connection with the Transaction is fair, from a financial
point of view to Harvest.

Conference Call and Investor Presentation

Harvest and Verano will hold a webcast conference call, including a
slide presentation, to discuss the Merger.

This conference call will be webcast live over the internet and can be
accessed through the link provided. Audio of the call will be available
to participants through both the conference call line and webcast,
however questions to management may only be submitted via the webcast.

About Harvest Health and Recreation

Harvest Health & Recreation Inc. is one of the first consistently
profitable, vertically integrated cannabis companies with one of the
largest footprints in the U.S. Harvest’s complete vertical solution
includes industry-leading cultivation, manufacturing, and retail
facilities, construction, real estate, technology, operational, and
brand building expertise — leveraging in-house legal, HR and marketing
teams, along with proven experts in writing and winning state-based
applications. The company has more than 625 employees with proven
experience, expertise and knowledge of in-house best practices that are
drawn upon whenever Harvest enters new markets. Harvest’s executive team
is comprised of leaders in finance, compliance, real estate and
operations. Since its founding in 2011, Harvest has grown its footprint
every year, has been ranked as the third largest cultivator in the U.S.
and currently owns licenses for more than 140 facilities across the U.S.
Harvest shares timely updates and releases as part of its regular course
of business with the media and the interested public. For more
information, visit: https://www.harvestinc.com/.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: Certain
information in this news release constitutes forward-looking statements
under applicable securities laws. Any statements that are contained in
this news release that are not statements of historical fact may be
deemed to be forward-looking statements. Forward looking statements are
often identified by terms such as "may", "should", "anticipate",
"expect", "potential", "believe", "intend" or the negative of these
terms and similar expressions. Forward-looking statements in this news
release include, but are not limited to, statements with respect to
accretive earnings, anticipated benefits associated with the acquisition
of Verano, statements with respect to the effect of the Transaction on
the combined company and its strategy going forward, the completion of
any capital project or expansions, the ability to settle the terms of
the Definitive Agreement, the timing for the completion of the
Transaction; the consideration to be received by shareholders of Verano,
which may fluctuate in value due to Harvest shares forming the
consideration; the satisfaction of closing conditions including
shareholder approvals, regulatory approvals and approval of the CSE. In
particular, there can be no assurance that acceptable terms for the
Definitive Agreement will be negotiated or that the Transaction will be
completed. Forward looking statements are based on certain assumptions
regarding Verano and Harvest, including expected growth, results of
operations, performance, industry trends and growth opportunities. While
Verano and Harvest consider these assumptions to be reasonable, based on
information currently available, they may prove to be incorrect. Readers
are cautioned not to place undue reliance on forward-looking statements.
Forward-looking statements also necessarily involve known and unknown
risks, including, without limitation, risks associated with general
economic conditions; adverse industry events; future legislative and
regulatory developments; inability to access sufficient capital from
internal and external sources, and/or inability to access sufficient
capital on favorable terms; the cannabis industry in Canada generally,
income tax and regulatory matters; the ability of Harvest to implement
its business strategies; competition; currency and interest rate
fluctuations and other risks.

Readers are cautioned that the foregoing list is not exhaustive. Readers
are further cautioned not to place undue reliance on forward-looking
statements as there can be no assurance that the plans, intentions or
expectations upon which they are placed will occur. Such information,
although considered reasonable by management at the time of preparation,
may prove to be incorrect and actual results may differ materially from
those anticipated.

Forward-looking statements contained in this news release are expressly
qualified by this cautionary statement and reflect our expectations as
of the date hereof, and thus are subject to change thereafter. Verano
and Harvest disclaim any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law. Factors that
could cause anticipated opportunities and actual results to differ
materially include, but are not limited to, matters referred to above
and elsewhere in Harvest’s public filings and the material change
reports that will be filed in respect of this Transaction, which are, or
will be, available on SEDAR.

Notice to U.S. Holders. Harvest has been formed outside of the United
States. Transaction will be subject to disclosure requirements of Canada
that are different from those of the United States. Financial statements
included in the documents, if any, will be prepared in accordance with
Canadian accounting standards and may not be comparable to the financial
statements of United States companies. It may be difficult for a
securityholder in the United States to enforce his/her/its rights and
any claim a securityholder may have arising under the U.S. federal
securities laws, since the companies are located in Canada, and some or
all of their officers or directors may be residents of Canada or another
country outside of the United States. A securityholder may not be able
to sue a Canadian company or its officers or directors in a court in
Canada or elsewhere outside of the United States for violations of U.S.
securities laws. It may be difficult to compel a Canadian company and
its affiliates to subject themselves to a U.S. court's judgment.